The Development Bank of Namibia (DBN) says it carried out its due diligence on TransNamib before availing a joint N$2.6 billion loan with the Development Bank of South Africa (DBSA).
TransNamib is currently faced with a liquidation threat from Challenge Air lawyers if it does not meet their demand to pay N$161 million within 15 days, being an amount due to the aircraft leasing company under a settlement agreement reached with now defunct Air Namibia.
The development can be viewed as a risk, despite its sole shareholder, government , having vowed to fight any attempts to liquidate the rail company.
“The lenders have done their due diligence on TransNamib and are satisfied with the risk mitigations put in place and the support pledged by TransNamib’s shareholder,” DBN Head of Marketing & Corporate Communication, Jerome Mutumba told The Brief.
However, Mutumba, could not divulge the terms and conditions of the loan citing customer confidentiality rules.
The loan which has its origins from a 2019 pledge by the two banks to avail N$8 billion towards infrastructure development in Namibia, will be used for the remanufacturing of rolling stock, acquisition of new rolling stock, modernisation of the TransNamib workshop and upgrading of signalling equipment, including spares and associated equipment.
According to Mutumba ,billions remain under-utilized under the facility, with TransNamib having accessed only N$2.6 billion.
“DBN and DBSA pledged N$8 billion for infrastructure projects in Namibian, N$5.4 billion remains to be utilized for viable infrastructure projects,” he said.
TransNamib has been facing numerous challenges over the past few years. In October, the company revealed to The Brief that it was faced with a locomotive shortage with only 25 operational out of a requirement of 75, and was betting on the refurbishment of 33 of its locomotives and a stopgap lease of seven more to improve operational efficiency and drive-up revenue.
The rail company has also embarked on a retrenchment exercise which will see 340 employees leaving at a cost of N$44 million, with a minimum expected saving of N$25 million on an annual basis.
